Fountain of Youth Company - Promising Sales Trends for Health in the Market - Research Paper Example

Fountain of Youth Company Research Report Introduction Foundation of Youth is a drink manufacturing Company that specializes in the production of bottled water, juice and soft drink in Australia. Under leadership of Ms Drinkwater, the company is divided into four main departments of Sales and Marketing, Administration, Production and Distribution. The company has identified a market opportunity in the production of Acai berry and beliefs that it will help increase the company’s product line. This report is meant to help Foundation of Youth Company make appropriate strategic decisions concerning the new product development. Company’s objectives To reduce the cost of advertising and promotion on Juice, water and soft drink in the next financial year To increase the level of production by running two eight hour shifts in a day To improve distribution of finished products to the target customers in order to reduce complaints To reduce the cost of maintaining vehicle in the company and adhere to environmental sustainability To increase its product line with products that will meet the current needs of customers who are interested in healthy products SWOT Analysis The SWOT analysis is meant to help Fountain of Youth determine its strengths and weakness as well as the opportunities and threats in the environment in which it operates. After identifying these factors, the Foundation of Youth will be able develop appropriate strategies that will help the company build on its strengths, reduce the weaknesses, make good use of the opportunities and counteract the threats. The strengths as identified in the background information originate from within the company while the opportunities and threats emerge from outside the company. Strengths Production of quality products as indicated by a fall in fault rate Strong customer base Well known company in Australia Automated production line Weakness High operational costs (labour and electricity costs) Reduced rate of production Poor channels of distribution of finished products Inability to conduct continuous product innovation Opportunities New product development (Acai berry) Customer loyalty Strong customer base for bottled drinks Threats Changes in customer needs and behaviour Existence of rival companies Possible lawsuits Reduced orders for soft drink products PEST Analysis Fountain of Youth has to understand the external environment in which it is operating so that it can conduct its business in accordance to the requirement by the forces in the environment. Political, economic, social and technological considerations are important for the success of Fountain of Youth, and as indicated below, the company cannot operate without their interference. Political factors The Fountain of Youth Company will have to follow the laws and regulations set by the government. Normally, the laws and regulations established by the government are binding and all businesses have to abide by these set of laws. The government’s taxation policies and price determination are some of the regulations Fountain of Youth Company will have to consider when developing the Acai berry soft drink. The two factors will help the company decide on the right price of the new product, since it cannot set a price higher than that determined by the government. Economic factors It is necessary for Fountain of Youth Company to understand the economic factors that are likely to impact its business activities. Economic factors not only come in play during the production stage, but also when marketing the products. Factors to be considered include income levels, spending patterns, rate of inflation, and unemployment vs. employment rates. These factors determine the amount of money in possession by customers to spend on a product. Social-cultural factors The social environment will also help the Fountain of Youth Company identify its target market and develop a product that will satisfy the needs of this target market. The company has to consider the values, beliefs, attitudes, religious and demographic factors when developing the Acai berry soft drink. For instance, there are people who belief that Acai berry does not in any way help reduce weight, and such group may not form part of target market for Fountain of Youth. Technological factors The company will have to use the modern technology in the production of Acai berry soft drink products that enhances maximum efficiency. Currently, the production line is automated which is a good start, but the company should seek for better automated machine to make the system even more efficient to be able to produce enough supplies to the market. The new technology will also help the company increase its production level that will cover the production costs, which the company claims have extremely increased. Questionnaire (For the Public) This questionnaire is meant to develop an understanding of the demographics and buying patterns of the target audience for Acai berry soft drink produced by the Fountain of Youth Company. I humbly request you to complete this questionnaire as objectively as you can. Be assured that the information you give in response to this questionnaire is only meant to help the Fountain of Youth Company make its strategic business decisions and would be treated with a lot of confidentiality. Your kind cooperation is highly welcome. Thanks. Section 1: Demographic information 1. Sex: (a) Male (b) Female 2. Age Range: (a) Below 18 (b) 18-25 (c) 25-34 (d) 35-45 (e) Above 45 3. State your occupation ……………………………………. 4. State your average income per month ……………………………………. 5. Where do you reside? …………………………………………………….. Section 2: Other relevant questions 6. How often do you purchase health/weight drink? (a) Daily (b) After two days (c) twice in a week (d) Weekly (e) Others (specify)………… 7. If weekly, how much do you spent on soft drinks alone? (a) $ 10 (b) $ 15 (c) $25 (d) $ 30 (e) More than $ 30 8. In your own opinion which group of people purchases more juice or soft drink? (a) Male (b) Female 9. Why do you think so? ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… 10. Are you aware of availability of health drinks in the market? (a) Yes (b) No 11. If yes, do you think they have an impact on the health of consumers? Explain …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….... 12. Have you ever purchased a healthy/weight loss drink as part of your shopping? (a) Yes (b) No 13. Why did you purchase the health/weight loss drink? (a) As a normal drink (b) To quench thirst (c) To reduce on weight (d) For fun 14. How much are you willing to spend on a health/weight drink? (a) $ 10 (b) $ 15 (c) between $ 10-15 (d) Less than $ 10 (e) Others (specify) ………………. 15. Where do you buy your health/weight drink? (a) Supermarkets (b) Physical location (d) Retail shops (c) Vendors (d) Others (specify) ……… 16. Which types of bottled drinks do you purchase more in a week? (a) Water (b) Juice (c) Soft drinks (d) others (specify) ……………….. Data collection and procedure The questionnaires were distributed to the sampled respondents of 30 members of the public to understand the buying behaviors of consumers of soft drink products. I handed over the questionnaires to respondents on time so that they had enough time to respond to the questions with a lot of care. Analysis of collected data The information collected from the public by use of questionnaires was analyzed to emphasize the response from the respondents. The analyzed information will be used by Fountain of Youth Company in making strategic decisions. Frequency distribution of amount spent on drinks (weekly) I wanted the respondents to identify the amount of money they spent on soft drinks in a week. Out of 30 respondents, only 1 respondent spent $ 10 in a week, 3 respondents agreed that they spent $ 15 on soft drinks while 4 respondents admitted that they spent $ 25 per week on soft drinks. 7 respondents out of 30 agreed that they spent $ 30 on soft drinks per week while the majority 15 spent more than $ 50 on soft drinks weekly. The frequency distribution for these results is shown below: Figure 1: Frequency distribution table for amount spent on soft drinks (weekly) Amount spent ($) No. of respondents 10 1 15 3 25 4 30 7 Above 50 15 Product performance Based on the information I collected from the respondents, it is evident that the performance of water, juice and soft drinks varies greatly. Out of 30 respondents, only 6 respondents representing 20% purchase bottled water, 8 respondents which accounts for 26.7% prefer juice while 16 respondents representing 53.3% consume more soft drinks compared to other products. Figure 2: Product performance rating Type of product Consumption (%) Water 20 Juice 26.7 Soft drinks 53.3 From the figure above, soft drink is the highest performing product with 53.3% followed by juice with 26.7%. Water is the worst performing product with only 20%. Statistics relating to weekly spending on health/weight drinks Further information collected from the respondents indicates that a good number of consumers purchase health/wealth soft drink products. Over 50 % of consumers purchase health/weight drink. However, 50% of these consumers purchase these drinks with the belief that they will help reduce their weight. Most of them indicated that they were willing to spend more than $ 15 on the product as long as their intension was realized. Cross tabulation of weight loss drink consumption and gender The response from the respondents shows a strong correlation between the consumption of weight loss drink and gender. More women purchase the product frequently than men. This indicates that they prefer the product more than men. This is illustrated in the following cross tabulation. Figure 3: cross tabulation of weight loss drink consumption and gender Frequency of purchase Male Female Daily 0 2 After two days 2 8 Twice in a week 3 4 Weekly 5 1 Total 10 15 Out of 15 women who completed the questionnaires, 8 of them purchase weight loss drink after two weeks, while only 2 men purchase the same product after every two days. On average, more women purchase weight loss drink than men. Sales forecast of existing and emerging trends The information collected from the research shows a promising sales trend for health/weight in the market. Fountain of Youth should start producing and distributing the product in considerably high quantities to meet the rising demand. This also implies increasing its product mix and manpower. The company should produce more soft drinks than water and juice as per the market trend. Reference Martin College of Business, Technology and Design, Market Trends Workbook. Study Group Australia Pty Limited, SGA1248-L6/03/13-V1, (2013). Read More